Learning from Past Mistakes about Managing Overtime after a Recession
After the last recession was over in 2002, overtime spiked at many extended hours operations and so did accidents and injuries on the job. After a recession, managers are usually gun-shy about hiring and for good reason – they want to feel confident that demand is truly back so they don’t generate oversupply. There are starting to be some early signs of improvement in the current economic climate, which means we may see overtime starting to creep up soon. Now’s the time to start planning in order to prevent accidents and injuries resulting from overtime.
Early Signs of Economic Improvement
The Q2 Bureau of Labor Statistics (BLS) statistics show improvement in productivity rates. In fact, overall productivity surged for the second quarter according to the BLS! It was up by a 6.6% annualized rate over the second quarter of 2008. This is the largest productivity increase since the third quarter of 2003.
Productivity is calculated by dividing output by hours worked. When you peel the onion back, and look at the components of the calculation, for Q2 of 2009 annualized output was down by 1.5% and annualized hours worked were down by 7.6%. So, we are still producing and working less, but it’s not as bad as a year ago. If you look at the numbers for manufacturing alone, annualized output was down 9.8% and annualized work hours were down by 14%. While this sounds horrendous, manufacturing productivity for Q2 was up 5% on an annualized basis when compared to 2008. This is the highest increase since the first quarter of 2005!
The real problem was with durable manufacturing (long term use products like cars, electronics, and furniture) – for Q2, annualized output was down 16% and annualized work hours were down 19%. The Cars for Clunkers program which started in July and ended August 24th will certainly positively impact the productivity numbers for Q3 (to be released in early November). The question that remains if whether the durable manufacturing productivity will continue to rise now that the Clunkers program has ended or whether demand will cede, causing work hours and output to drop back further again.
Managing Overtime
Many employees love overtime because of the cash it puts in their pocket. The problem is that too often overtime follows the 80/20 rule, where by 20% (or even less) of the workers perform 80% of the overtime. According to abstracts from a National Institute for Occupational Health and Safety (NIOSH) conference entitled Long Working Hours, Safety, And Health: Toward A National Research Agenda, (held in 2004 not long after the last recession had receded), “An association between working long hours and worker job injuries has been reported (Landsbergis, 2003: Spurgeon, Harrington & Cooper, 1997). The risk of experiencing a workplace injury has been shown to increase with long work hours and increases exponentially beyond the ninth hour of work (Hanecke, et al., 1998). So, when a few workers are responsible for most of the overtime, those workers are likely to be injured.” And when working days extends into working nights, the risk is even greater.
Circadian Technologies participated in the conference and shared the results of their 2002 Shiftwork Practices Survey. Using this Survey, we can look back at the overtime related trends at that time, just after the last recession, and see what we can learn from how companies/organizations handled overtime then. New ideas for managing overtime are presented below.
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According to 2002 the Shiftwork Practices Survey almost 60% of the responders to the survey stated that the maximum hours that employees can work per day are between 12 and 16 hours. Among the facilities responding, 23% either had no limit on maximum hours or the limit was over 16 hours. And, over 40% the facilities had no limit on the maximum number of consecutive days an employee could work. Operations with 12-hour schedules were more likely to impose a limit as to number of consecutive days an employee could work.
Safety Idea #1 – Reassess how many hours people can work each day and how many consecutive days they can work without an appropriately restful break. Those operations without a limit to the number of hours an employee can work each day, should consider adding a limit. When determining what the limit should be, organizations should consider the impact of an error arising out of the jobs worked vs. setting the same limit for the entire operation. Also, factor in whether the facility has a limit on the number of consecutive days an employee can work – this will also have an impact on the setting of daily limits. Many people can work longer hours during a compact period reasonably safely, but not for longer periods of time without recovery days.
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Also according to Circadian Technologies’ 2002 Shiftwork Practices Survey, 10 % of the facilities surveyed had an average individual overtime level of 500+ hours per year (24 + % overtime). These facilities reported higher fatigue levels among employees; those reporting severe fatigue problems averaged 15.4% overtime compared to 8.7% for facilities who reported no fatigue problem. Within each facility, overtime is rarely distributed evenly, that is, a minority of the employees works the majority of the overtime, some of them reaching extreme levels of over 1,000 hours per year.
Safety Idea #2 – Look at how overtime is allocated to employees and try and spread it out. Aim for an overtime per employee goal and regularly evaluate how well the goal is being achieved. Consider putting rules or approvals in place rules around shift trading so that employees can’t bulk up on overtime without managers knowing about it.
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Circadian’s 2002 Shiftwork Practices Survey showed that 42% of the shift work operating facilities required at least some mandatory overtime to provide the coverage they need. How employees are assigned to work overtime (e.g., hold-over or on-call) has an impact on workers’ performance, morale, fatigue levels, and safety. Hold-overs were used by 73% of the facilities when the normal shift was being extended. Hold-overs were used exclusively to manage overtime by 40% of the facilities. This gives employees limited warning of their overtime assignment, and often results in double shifts without sufficient preparation. About one-quarter (27%) relied exclusively on call-ins, which has the effect of reducing the number of days off, but does not usually increase the length of the work day.
Safety Idea #3 – Revisit how overtime is assigned to workers. Consider the impact on employees’ performance, morale, fatigue levels, and safety. Do whatever you can to plan ahead and always review overtime levels and how overtime was assigned after the fact so you can make better decisions the next time.
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Perhaps by looked closely at the 2002 history – the impact of overtime at the end of the last recession, and by thinking critically about some of the safety ideas presented above, overtime will be more effectively managed this time. This should improve safety, reduce the costs of accidents and injuries, and improve employee well-being.
©2009 Circadian Age, Inc. – ‘Working Nights’
Tags: fatigue, Human Capital, injury, Productivity, readiness for work, Safety, shift work, Working Nights
